ANN/INQUIRER.NET – Foreign funds made a comeback to the Philippines in November, driven by investments in government debt securities, which counterbalanced outflows from the local stock market following Donald Trump’s re-election that shook global equities.
Data from the Bangko Sentral ng Pilipinas (BSP) revealed a net inflow of USD96.59 million in foreign portfolio investments (FPI) for November, reversing the USD529.68-million net outflow recorded in October.
However, the net inflow marked an 85.6 per cent decline compared to the same period last year. Also known as “hot money” because of their tendency to leave at the first sign of trouble, FPIs are highly sensitive to developments at home and abroad unlike firmer commitments such as foreign direct investments, which tend to stay longer and can generate jobs for Filipinos.
A net inflow means more of these short-term foreign funds entered the country against those that left.
Explaining the November results, the central bank said gross inflow of hot money jumped by 25.8 per cent month-on-month to USD1.86 billion.
Of that amount, 71.4 per cent went to peso-denominated government securities like Treasury bonds and Treasury bills, which might have become more attractive to foreign funds after yields rose as markets digested the news of Trump’s victory.
The remaining 28.6-per-cent of inflows were invested in publicly listed companies, with banks, holding firms and real estate receiving most of the fresh funds.
Overall, the BSP said most of the FPIs that entered the country in November came from the United Kingdom, Singapore, the United States (US), Luxembourg and Norway.
On the flip side, a total of USD1.76 million hot money exited the Philippines, down by 12.2 per cent.
The US remains to be the top destination of outflows, receiving USD914.20 million or 51.8 per cent of total capital that left the country.
Latest data from the Philippine Stock Exchange showed the main index fell by 7.4 per cent month-on-month in November, with foreigners selling PHP23.08 billion more shares than they bought in the local equities market last month amid uncertainties over the second Trump administration’s impact on the global economy.
From January to November, the BSP said the Philippines posted a hot money net inflow of USD2.59 billion, still below the USD4.2 billion forecast of the central bank.
